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Two in Five Parents Would Spend More on a New Home Near a Top School

Two in Five Parents Would Spend More on a New Home Near a Top School

School league tables and Ofsted reports influence parental decisions

LONDON, UNITED KINGDOM -- (Marketwired) -- 10/09/13 -- With competition for places in the most popular schools increasing(i), new research(1) from Nationwide Building Society shows that nearly a quarter (23 per cent) of UK parents of children aged 5 to 16 years would move and be prepared to pay between two and 10 per cent extra on the price of their new home to be in the catchment area of a better school. Nearly one in ten (eight per cent) would be prepared to pay more than 10 per cent extra for their house and eight per cent would pay anywhere up to an additional two per cent.

With the typical UK home currently worth GBP 172,127(2), this could lead to a substantial monetary outlay for parents at a time when household finances are already being squeezed. For example, parents willing to pay two per cent more would need to find nearly GBP 3,500 extra. Anyone prepared to pay 10 per cent more would add an additional GBP 17,213 to the cost of their new home.

             Price of typical UK home: GBP 172,127(2)            
% increase                    New house price      School premium
2 per cent increase               GBP 175,570           GBP 3,443
5 per cent increase               GBP 180,733           GBP 8,606
10 per cent increase              GBP 189,340          GBP 17,213
12 per cent increase              GBP 192,782          GBP 20,655
15 per cent increase              GBP 197,946          GBP 25,819
20 per cent increase              GBP 206,552          GBP 34,425

Mortgage considerations(ii)

The additional cost of the house will also have implications on the cost of the mortgage. Paying an additional 10 per cent on the cost of a typical UK home (GBP 172,127(2)) would mean buying a house worth GBP 189,340.

Based on a 15 per cent deposit, a house worth an additional 10 per cent would require an extra GBP 2,582 deposit and, if for example, Nationwide's five-year Flexclusive tracker mortgage(iii) was taken out, would also mean an extra GBP 76.75 per month in mortgage repayments. So, in the course of the first year, parents would need to find an additional GBP 3,503 and, over a five-year period, it would cost GBP 7,187 extra.

Parents are already making house purchase choices based on schools. Our research shows that nearly one in five of parents (18 per cent) admit that a school league table or school Ofsted rating has influenced where they chose to live.

Richard Napier, Nationwide's divisional director for savings and mortgages, comments:

"Choosing the right school for your child is possibly one of the most important decisions a parent will make and it appears league tables and Ofsted reports play a significant part in that decision.

"Competition for places at the UK's best schools continues to increase and, although household finances remain stretched, it is significant that a number of parents are willing to pay more on the price of a new home to ensure their child goes to a good school.

"Taking the cost of a typical UK home, any parent willing to pay 10 per cent more would need to find an additional GBP 17,000 on the total cost of the house, which is a lot of money in the current climate. And, this is before you factor in the cost of items such as uniform, P.E. kit, lunch and even travel to and from school.

"And with the additional monthly repayment on Nationwide's five-year Flexclusive tracker mortgage(iii) being an additional GBP 76.75, it may well be a premium parents think is worth paying."

Notes to editors:

(i) n-pupils

(1) All figures, unless otherwise stated, are from YouGov plc. Total sample size was 1,012 UK parents of children aged 5-16 years whose child will be attending school in the next academic year. Fieldwork was undertaken between 7th - 13th August 2013. The survey was carried out online.

(2) Source: Nationwide September House Price Index http://www.nationw 3.pdf

(ii) Deposit calculations

15% deposit on GBP 172,127 = GBP 25,819

15% deposit on GBP 189,340 = GBP 28,401

Deposit difference: GBP 2,582

(ii) Monthly repayment calculations

Property value: GBP 172,127 / Loan: GBP 146,308 / Term: 25 years / Mortgage: 5 year Flexclusive Tracker (Rate used: 3.94%)

Monthly repayment: GBP 767.42

Property value: GBP 189,340 / Loan: GBP 160,939 / Term: 25 years / Mortgage: 5 year Flexclusive Tracker (Rate used: 3.94%)

Monthly repayment: GBP 844.17

Monthly payment difference: GBP 76.75

(iii) The mortgage product and monthly payments shown above are for illustration purposes only. They are based on a new customer moving house, the initial rate during the deal period and on a capital and interest repayment method. They do not take into account any fees or charges payable for changing the mortgage, or the applicable interest rate when the mortgage deal ends.

To get access to our range of Flexclusive offers you must either:

1.  Hold a FlexAccount with a Visa debit card (not cash card or cash card+)
    --  Have been paying in GBP 750+ a month (excluding internal transfers)
        for the last 3 months; or 
    --  Complete an account switch to us (from a non-Nationwide account)
        using our Current Account Switch Team or have done so in the last 4
        months; or
2.  Hold a FlexDirect or FlexPlus account.

About Nationwide Building Society

Nationwide is the world's largest building society as well as the second largest savings provider and a top-three provider of mortgages in the UK. It is also a major provider of current accounts, credit cards, ISAs and personal loans. Nationwide has around 15 million members.

Customers can manage their finances in a branch, on the telephone, internet and post. The Society has around 15,000 employees. Nationwide's head office is in Swindon with administration centres based in Northampton, Bournemouth and Dunfermline. The Society also has a number of call centres across the UK.

Find recent press releases and photos at the Nationwide Media Centre:

Twitter: @NationwidePress

YouTube: Contacts: Media information: Nationwide Mike Pitcher 01793 657225

Nationwide Paul Beadle 01793 655189

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